Seismic tests done, now the wait

The seismic survey ship Polarcus Alima in Dunedin in 2012. New Zealand Oil and Gas has now finished its seismic testing off the Otago coast. Photo by Gerard O'Brien.

New Zealand Oil and Gas has finished its seismic testing
off the coast between Dunedin and Oamaru. Business editor
Dene Mackenzie asked chief executive Andrew Knight about the
next steps in the search for hydrocarbons.

New Zealand Oil and Gas chief executive Andrew Knight was
positive and enthusiastic when he called at the Otago
Daily Times this week to talk about the company's latest
seismic testing.

The company has completed an incident-free 3D seismic survey
covering about 700sq m of the Clipper permit off the coast
between Dunedin and Oamaru.

The company was operating under the new Seismic Code of
Conduct in relation to the noise levels permitted for the
testing. The code was introduced to mitigate the effects any
noise might have on sea mammals during the testing.

There were four marine observers on the testing vessel - two
visual and two acoustic.

''We came well under the limits of the code. We are at the
vanguard of this testing, being the first seismic survey to
be carried out under the new code and proving our technology
to be world-leading.''

Each day the majority of sightings were of fur seals, along
with some dolphins and whales.

At $300,000 a day, any delays would have been expensive but
the testing vessel ''sailed clear'', Mr Knight said.

The seismic data had been sent overseas for processing. That
would take about six months to complete, followed by a year
or so of analysis before a decision was made whether to drill
for gas.

NZOG permit manager Nick Cozens said the raw data had to be
turned into something the company could use to make the
decisions on drilling.

The company and its joint-venture partners were sitting on
three areas with comparable attributes that tied back to the
Galleon permit of 1985. The formation had ''sub-commercial''
success in 1985 and was where Texas oil giant Anadarko was
drilling now.

''We know hydrocarbons are in the area but we need to find
whether there is enough to make it commercial. We won't know
until we get the detail of the data.''

It was easier to prove against drilling, with a nine in 10
chance there was not enough gas to make it commercially
viable, Mr Cozens said.

At a cost of tens of millions of dollars to drill, a lot of
analysis would be carried out to get to that point.

Asked why there was such a sudden rush to the Canterbury and
Great South Basins, Mr Knight said the Government had done a
good job promoting the industry. The basins were regarded as
''frontier'', as they had not been explored enough to collect
sufficient data.

Anadarko was drilling in Mozambique and, in 10 years, that
country would become the third-largest producer of oil and
gas and it was all for export.

Mr Knight warned New Zealand was not about to turn into
California of the 1800s. There would be no gold rush. But the
area was proving attractive enough for overseas companies to
come to try their luck.

Woodside, NZOG's joint-venture partner, had not worked in New
Zealand before but now it was here, he said.

Whether oil and gas companies would establish bases in Otago,
or other areas, has been a keenly debated topic recently.

Mr Knight said when the Kupe field was developed, the project
employed between 2500 and 3000 plumbers, electricians,
builders and other tradespeople. Numbers reduced once the
project was operating but there was still a need for ongoing
maintenance by the various trades.

''It's a tremendous boost to a local economy.''

Mr Cozens said highly skilled technical workers were required
to safeguard the company's intellectual property during the
drilling. Those jobs were ''back at base''. Once the IP had
been protected, it could be used in other areas, such as
Indonesia, which had similar characteristics to New Zealand.